Johannesburg - Multi-commodity mining company Petmin [JSE:PET] has announced a R350m broad-based black economic empowerment (BBBEE) deal with the community and employees of its Somkhele anthracite mine in KwaZulu-Natal.
Petmin on Wednesday said the deal, subject to shareholder approval, sees a 20% stake in the mine being acquired by its employees and the local community.
Tendele Coal Mining Proprietary Limited (Tendele) is the owner of the Somkhele mine. Petmin currently owns 100% of Tendele.
Petmin will help the local community and Tendele employees become shareholders in Tendele. Community and employee trusts will be formed and they will own 20% of Tendele, initially through a special purpose vehicle (SPV) and subsequently through direct share ownership in Tendele. Petmin’s shareholding in Tendele will be reduced to 80%.
The BBBEE deal was negotiated with a traditional council representing the 175 000-strong Mpukunyoni community, and with trade unions representing Tendele employees.
Preference shares in the SPV will be issued in exchange for R270m from a Nedbank subsidiary, and R80m from Petmin, totalling R350m. The funds will be used to subscribe for the 20% shareholding in Tendele. Eighty percent of the SPV shares will be allocated to the Community Trust, and 20% to the Tendele Economic Benefits Sharing Scheme for employees.
Dividends from Tendele will be used to repay the R350m preference shares plus interest. Petmin effectively guarantees the redemption of the Nedbank funding, as it will subscribe for additional preference shares in the SPV in the event of a potential default in payments to Nedbank.
Tendele’s Somkhele mine operates in the Mpukunyoni community of about 175 000 people. The mine employs around 800 workers from the local community, of a total workforce of 1 000. The beneficiaries of the Community Trust will be the children and youth of the Mpukunyoni community, and all proceeds will be used for their development.
Tendele will donate a founder’s contribution of R2.4m to the Community Trust and this will be used to construct a training/lecture hall at the Mpukunyoni community hub.
“This will be available for community youth development activities funded by the trust,” said Joyce Makhema, Tendele general manager for community relations.
The Mpukunyoni community will also receive an annual guaranteed payment of R1m to support development projects in the area. There is provision for supplementary payments up to another R1m per year, depending on production at the mine.The transaction is expected to be implemented within the next three months.